Chapter 13: Marriage, Sex and
Babies

In most past societies that we know of, most
people got married, most marriages lasted until the death of one of
the partners, and most babies were born, although not necessarily
conceived, in wedlock. None of these statements is true of the United
States at present, and they are becoming increasingly
untrue.

This raises a set of interesting questions. One is
whether there is a plausible economic explanation for these changes.
Another is what part legal rules have played, either as cause or
effect, in the process.

The first step to the answer is another question:
Why, in most societies, are childbearing and household production
undertaken primarily by couples who have committed themselves to the
long term, often lifetime, partnership called marriage?

Why people get
married

Many years ago, I accepted a position in the UCLA
economics department. Doing so required me to move across the
country, find a place to live, develop relationships with a new set
of friends and colleagues—costly activities which produced a
return only if I remained at or near UCLA.

Suppose when I came, it was for a salary of
$40,000. A year or two later, the department chairman, who is of
course an economist, makes the following calculation:

"If Friedman was willing to come for $40,000,
despite all of the transitional costs he had to pay, he would be
willing to stay for $30,000. After all, if he leaves he has no way of
getting back his moving costs, or taking his new friends with him, or
... ."

The chairman calls me into his office to discuss
the tight state of the department's budget.

I am happy to talk to the chairman. I too am an
economist and have made my own analysis of sunk costs. I know, and
the chairman presumably knew, that for my first year or two I would
not be a very productive member of the faculty, since I would be
distracted by the costs of learning a new environment, finding out
what colleagues I could usefully interact with, and the like. Now
that I have finished that process I am more useful as teacher,
researcher, and colleague. If he was willing to pay me $40,000 to
come he should be willing to pay me $50,000 to stay. After all, there
is no way he can get back the money he lost during my first
year.

This stylized fiction demonstrates a real and
important point: A fundamental reason for long term contracts, in
marriage or business, is the existence of relation-specific sunk
costs. Before I came to UCLA, both they and I were bargaining on a
competitive market; there are other universities and other
economists. Once I had been hired and both they and I had adapted to
our relationship, we were stuck in a bilateral monopoly with
potential bargaining costs. One way of reducing those costs is
through long term contracts—explicit, as in the tenure system,
or implicit, as in the general custom of not cutting an employee's
salaries save under special circumstances.

Marriage is an extreme example. While many of us
like to believe that our husbands or wives were uniquely suited to
that role, it is not true; if it were, the chance of finding them
would be remote. I at one time did some rough calculations on the
subject and concluded that my present wife is about a one in two
hundred thousand catch. That seems reasonably consistent with the
fact that I found her, given the mechanisms our society provides for
the early stages of the search process, such as sorting people
socially by interests and educational status. I was lucky, but not
unreasonably lucky. It is also consistent with the fact that in the
years since finding her, I have met one or two other women who might
have been as well suited to me.

They might have been as well suited to me, but it
would have been foolish to investigate the matter. Once a couple has
been married for a while, they have made a lot of relationship
specific investments, born costs that will produce a return only if
they remain together. Each has become, at considerable cost, an
expert on how to get along with the other. Both have invested,
materially and emotionally, in their joint children. Although they
started out on a competitive market, they are now locked into a
bilateral monopoly with associated bargaining costs.

One way of reducing those costs is a long-term
contract, till death do us part. There remains room for bargaining
within the marriage, but the threat of walking out is removed. And
bargaining within the marriage can be reduced by well defined social
roles, laws and customs prescribing each party's obligations, as well
as by the knowledge that when the bargaining is over the two parties
will still have to live with each other.

There are costs to that solution. The most obvious
is that people who make the wrong choice are stuck with it. That
problem that can be reduced by more careful search, but not
eliminated. Clearly defined sexual roles may result in an inefficient
division of labor, a husband who is good with children working while
a wife who is good at earning money stays home. And even within the
prescribed pattern, each partner still has available the threat of
adhering to the letter but not the spirit of the contract. So far as
I know, nobody has ever been divorced for cooking, or making love,
badly.

My favorite evidence of the limits to contract
enforcement in a traditional system of marriage is provided by
al-Tanukhi, a ninth century Arab judge who produced a volume of
anecdotes for the entertainment of his contemporaries.

A woman stood waiting on the road for
the Vizier Hamid ibn 'Abbas and complained to him of poverty, asking
alms. When he had taken his seat, he gave her an order for two hundred
dinars. The paymaster, unwilling to pay such a sum to a woman of her
class, consulted the vizier, who said that he had only meant to give
her two hundred dirhems. But as God had caused him to write dinar for
dirhem, gold for silver, so the sum should be paid out as it was
written.

Some days later, a man put a petition into his
hand, wherein he said that the vizier had given his wife two hundred
dinars, in consequence whereof she was giving herself airs and trying
to force him to divorce her. Would the vizier be so good as to give
orders to someone to restrain her? Hamid laughed and ordered the man to
be given two hundred dinars.

[Hamid should be written with a long a and a long
i]

In traditional Islamic society, men could divorce
their wives but women could not divorce their husbands. Yet the
Vizier, and presumably al-Tanukhi, took it for granted that as a
practical matter the wife could force a divorce and not even the
Vizier could prevent it.

If traditional marriage provides a solution to the
problems of relationship-specific sunk costs, why have we abandoned
it? One answer is that in traditional societies child rearing was
something close to a full time job and child rearing plus household
management at least a full time job. One profession, housewife,
absorbed almost half the labor force. Most individual women were
specialized to the job of being the wife of a particular
man.

Two things changed that. One was the enormous drop
in infant mortality over the past two centuries. It used to be the
case that in order to be reasonably sure of ending up with two or
three children, a woman had to produce children practically nonstop
during her fertile years. Today, a family that wants two children has
two children.

The second change was the shift of production out
of the home. Clothes are now made in factories by machines, bacon is
cured by professionals. Clothes may be washed in the home, but most
of the work is done by the washing machine. The job of housewife has,
for most families, gone from a full time to a part time job. The
result is that women are less specialized to a particular job and a
particular man. There are still substantial costs to breaking up a
marriage, but they are considerably lower than two hundred years ago
and, as a result, more marriages break up. Our legal institutions
have changed accordingly, shifting away from indissoluble marriage to
something close to divorce on demand.

I Gave Him the
Best Years of my Life: The Problem of Opportunistic
Breach

Two firms agree on a long-term joint project. One
will research and design a new product; the other will produce and
market it. The first, having done its part of the job, hands over the
designs—and, in a world without enforceable contracts, the
second firm dissolves the agreement, produces and markets the
product, and keeps the money. This is the problem of opportunistic
breach, discussed in the previous chapter in the context of building
houses.

A couple marries. For the next twenty years, the
wife is bearing and rearing children—a more than full-time
job, as those who have tried it can attest. The husband supports the
couple, but not very well, since he is still in the early stages of
his career.

Finally the children are old enough to be only a
part-time job and the wife can start living the life of leisure that
she has earned. The husband gets promoted to vice-president. He
divorces his wife and marries a younger woman.

It makes a better soap opera than my first story,
but the economics are the same. In a traditional marriage, the wife
performs her part of the joint project early, the husband late. That
timing, combined with easy divorce, creates the potential for
opportunistic breach—encouraged by the fact that most men find
women more attractive at twenty-five than at forty-five.

Once women recognize that problem, as by now they
have, they adjust their behavior accordingly. One way is to become
less specialized to the job of housewife, to have a career and hire
someone else to clean the house and watch the kids. Another is to
postpone or spread out childbearing, so as to make the pattern of
performance by the two partners more nearly the same. Both
adjustments fit, and may help explain, changes of recent decades,
including the increase in both age at first marriage and age at first
child.

Another solution is to make the contract more
nearly enforceable by imposing substantial damage payments on the
breaching spouse. While that happens to some extent, there are a
number of practical problems. One is the difficulty of enforcing such
rules. Human capital is mobile, and a man ordered to pay alimony or
child support may move to another jurisdiction, making collection
hard. A second is the problem of monitoring quality, discussed
earlier. If a husband who asks for a divorce must pay large damages,
he has the alternative of trying to make his wife's life so miserable
that she is willing to give him a divorce without being asked. And if
we try to prevent that with a legal rule that automatically gives the
wife a large compensation whenever a marriage breaks up we create a
risk of opportunistic breach in the opposite direction. The net
result at present appears to be that, although husbands are sometimes
required to pay money to their wives when there is a divorce, the
ex-wife ends up, on average, worse off, and the ex-husband better
off, after the divorce.

[book link: Ask June]

So far I have mostly been concerned with one
oddity of modern society—the historically high ease and
frequency of divorce. The same arguments help explain a less striking
oddity—the substantial number of people who never get married.
We are left with a third puzzle: the large and perhaps historically
unprecented number of people who don't get married but do have
children.

Out of Wedlock
Births

One popular explanation for the sharp increase in
the illegitimacy rate over the past few decades is that it is a
consequence of welfare laws. Poor women are, in effect, paid to have
children—perhaps not enough to make having children profitable
in an accounting sense, but enough to make it profitable for some in
the more relevant economic sense, which includes non-pecuniary
benefits as well as pecuniary ones. A woman who is not quite willing
to have a child if she knows she must support it herself may be just
barely willing if she knows that the state will pay part of the
cost.

The problem with this explanation is that although
the highest illegitimacy rates occur in low-income populations,
illegitimacy rates in parts of the population to which welfare is
almost irrelevant have also risen. So although welfare might be one
cause of the changes, it cannot be the only cause. A second piece of
evidence in the same direction is that, despite recent decreases in
the real subsidy to childbirth, the illegitimacy rate continues to
rise.

A second explanation, proposed by my friend James
Woodhill, is that the illegitimacy rate, like the divorce rate, has
increased as an indirect consequence of reduced mortality—this
time not infant mortality but mortality in child birth. Until recent
times, the single most dangerous thing that an ordinary person did
was to have a baby. He argues that the result was a world where, in
the age groups relevant to marriage, men outnumbered women. Women
were thus in a sufficiently strong market position to be able to
demand support for their offspring as a condition for sleeping with a
man and bearing his children. As medicine improved and the numbers
shifted, women's market position became weaker, with the result that
some who wanted children were unable to find a man willing to support
them.

To make the story more vivid, add in one more
factor. Women typically marry men a few years older than they are. In
the mid-sixties, as the children of the baby boom reached
marriageable age, women born in 1946 were looking for men born in
1944—and there weren't very many of them. Some, unable to find
a husband, accepted a lover instead. And so the sexual revolution was
born.

A different and more elaborate explanation has
been offered by two economists, George Akerlof and Janet Yellin, who
argue that the increase in illegitimacy was an indirect consequence
of the widespread availability of abortion and contraception. On the
face of it, that seems backwards; abortion and contraception prevent
unwanted children, and we would expect that, on average, people who
are not married are less likely to want children than people who are.
Their argument, in my words not theirs, goes as follows:

[article link]

In a world without contraception or abortion, sex
and childbearing are linked; they are, in the jargon of economics,
joint products. Each act of intercourse produces both sexual
pleasure and, with some probability, a baby. Both women and men enjoy
children, but not equally; women have a higher demand for children
than men do.

Here as elsewhere in economics, "demand is higher"
means that the quantity demanded is higher at any given price. In a
world where men father children but women raise them at their own
expense, men may well want more children than women since, in that
world, having children is expensive for women and inexpensive for
men. But in a world where the costs were evenly divided, women would
choose more children. That, at least, is the underlying
conjecture.

As long as sex and childbearing are linked,
someone who wants sex can only get it combined with a possibility of
children. That is a good reason for women to refuse to consent to sex
unless the man guarantees support for any children that result,
either by marrying her or by committing himself to do so if she gets
pregnant. She can expect to get those terms because other women face
the same risk and thus make the same demand.

We now add in legal abortion and widely available
contraception, breaking the link between sex and childbearing. Women
who don't want children are willing to provide sex on much less
demanding terms, since they enjoy it too. Women who want both sex and
children must compete for men with women who want only the former.
They end up getting them, on average, on less favorable terms. Some
women who want children must have them without husbands.

There is an empirical problem with this
explanation. Both reliable contraception and safe illegal abortions
were available to middle and upper class women before they were
available to poorer women. If the Akerlof-Yellin explanation is
correct, high illegitimacy rates should have appeared first near the
top of the income scale and then worked their way down. What actually
happened was the reverse. To explain that, one must combine their
explanation with something else, perhaps the role of welfare payments
in encouraging illegitimacy at the bottom of the ladder.

Before closing, I should add one more possible
explanation: rising incomes. The richer people are, the easier it is
for a woman to support children by herself. Some women may regard a
husband as a net cost, and so prefer, if possible, to do without
one.

Explaining Sex
Law

Many societies, including ours, forbid
prostitution. Many societies, until recently including ours, forbid
fornication and adultery. The arguments in favor of permitting people
to engage in transactions in their mutual benefit seem to apply to
sex as to anything else, so why do these laws exist?

The easiest to explain is the law against
adultery—especially, although not exclusively, female
adultery, which in most societies is more severely sanctioned than
male adultery. The terms of a traditional marriage include sexual
exclusivity. From the standpoint of the husband, one reason is that
he wants to be sure the children he is supporting are his own. The
wife does not have that problem, but she would like to be sure that
her husband is not spending money that should go to her and her
children on another woman and other children instead. For both, there
is also a link between sexual fidelity and emotional
commitment—and emotional commitment, or if you prefer mutual
altruism, helps reduce the problems of a bilateral monopoly
bargaining game, which is one of the things a marriage is.

The Akerlof-Yellin argument provides a possible
explanation for laws against fornication and prostitution. Even in a
world without reliable birth control, it was still sometimes possible
to get sex without marriage, and that fact weakened the bargaining
position of women who wanted sex, babies, and husbands. Laws making
sex outside of marriage illegal improve the bargaining position of
women who want to get married, or stay married, or to maintain a
strong bargaining position within marriage. Hence it is rational for
such women to support such laws.

It may also be rational for at least some men to
support them. If the argument is right, a longer-term result of
access to sex without marriage may be a partial breakdown of the
institution of marriage. If, as seems to be the case, children
brought up by two parents end up on average as better people, more
valuable trading partners and fellow citizens, than children brought
up by one, preserving the institution of marriage may be desirable
for men as well as for women.

Glittering
Bonds

Premarital sex is not, popular opinion to the
contrary, a new discovery. In most societies we know of, however, men
prefer to marry women who have never slept with anyone else. This
creates a problem. Unmarried women are reluctant to have sex for fear
that it will lower their ability to find a suitable husband, and as a
result unmarried men have difficulty finding women to sleep
with.

One traditional solution to this problem is for
unmarried couples to sleep together on the understanding that if the
woman gets pregnant the man will marry her. This practice was
sufficiently common in a number of societies for which we have data
that between a quarter and half of all brides went to the altar
pregnant.

[book link]

One problem with this practice is that it creates
an opportunity for opportunistic breach by the man, the strategy of
seduce and abandon familiar in folk songs, romantic literature, and
real life. That problem can be reduced by converting the
understanding into an enforceable contract. Under traditional common
law, a jilted bride could sue for breach of promise to marry. The
damages she could collect reflected the reduction in her future
marital prospects. They were in fact, although not in form, damages
for loss of virginity.

Starting in the 1930's, U.S. courts became
increasingly reluctant to recognize the action for breach of promise
to marry, with the result that between 1935 and 1945 it was abolished
in states containing about half the population. This created a
problem for women who wanted to engage in premarital sex but did not
want to end up as single mothers in a society where that status was
both economically difficult and heavily stigmatized.

The solution they found was described in "Rings
and Promises," an ingenious article by Margaret Brinig. The practice
of a man giving his intended a valuable diamond engagement ring is
not, De Beers' ads to the contrary, an ancient custom. Data for
diamond imports in the early part of the century are not very good,
but Brinig's conclusion from such information as she was able to find
was that the practice only became common in the 1930's, peaked in the
1950's and has since declined.

Her explanation was that the engagement ring
served as a performance bond for the promise to marry. Instead of
suing, the jilted bride could simply keep the ring, confiscating the
posted bond. The practice eventually declined not because of further
legal changes—at present no states recognize the action for
breach of promise to marry—but as a result of social changes.
As pre-marital sex became more common and virginity of less
importance on the marriage market, the risk of opportunistic breach,
and thus the need for a bonding mechanism, declined.

Byways of
Seduction Law

A few years back, while investigating the history
of punitive damages, I stumbled across an odd and interesting bit of
nineteenth century law. In both England and America, when a man
discovered that his daughter had been seduced he could sue the
seducer—even if the daughter was an adult. The grounds on
which he sued were that he, the father, had been deprived of the
daughter's services. Suits for seduction were thus treated as a
special case of the doctrine under which a master could sue for
injuries to his servant.

In one case, a judge held that it was sufficient
basis for the action if the daughter occasionally acted as hostess at
her father's tea parties. Once the father had standing to sue as a
master deprived of his servant's services, he could then base his
claim, not on the actual value of the services, but on the
reputational injuries suffered by the family as a result of the
seduction.

The obvious question is why, given that seduction
was considered a wrongful act, the law took such a roundabout
approach to dealing with it. The explanation I found in the legal
literature was that one party to an illegal act cannot sue another
for damages associated with the act. If you and I rob a bank and you
drop the loot on the way out, I am not entitled to collect damages
for your negligence. Fornication was illegal, hence a seduced woman
was party to an illegal act, hence she could not sue for damages. So
the law substituted the legal fiction of the father suing as a master
deprived of his daughter's services.

It occurred to me at the time that there was
another, and perhaps more plausible, explanation of what was going
on. In traditional societies, including 18th and 19th century
England, fathers attempt to control who their daughters marry. One
tactic available to a daughter who disagrees with her father's choice
is to allow herself to be "seduced" by the man she wants to marry, in
the expectation that her father, faced with a fait accompli
and possibly a pregnancy, will give his consent. That tactic appears
explicitly in Casanova's Memoires, which provide a vivid and
detailed first hand account of life in eighteenth century
Europe.

A legal doctrine that gave the daughter the right
to sue would lower the risk of the daughter's tactic for evading
parental control by making it possible for her to punish a seducer
who refused to marry her, and would thus weaken paternal authority. A
legal doctrine that gave the father control over the action gave him
a threat that could be used to discourage enterprising, and
unacceptable, suitors.

Back in chapter 1, I described the economic
analysis of law as involving three different projects: predicting the
effect of legal rules, explaining legal rules, choosing legal rules.
In discussing the second project, I offered as an example the Posner
conjecture that common law rules tend to be economically
efficient.

I have just provided a different example. My
explanation for why common law treated seduction in the peculiar way
it did depends on the assumption that the people shaping the law
wanted fathers to be able to control who their daughters married. I
do not assume that such control was efficient.

Buying
Babies

Some years ago, I came across an article in the
Wall Street Journal that astonished me for the degree of
economic ignorance displayed by a publication whose writers I
expected better of. Its subject was the adoption market. The writers
discussed how that market has swung between shortage and surplus,
between periods when infants were unable to find adoptive parents and
periods when potential parents were unable to find suitable infants
to adopt. They concluded that it demonstrated a failure of the free
market.

There was one small point that the article
omitted. Under United States law, it is illegal for prospective
adoptive parents to pay a mother for permission to adopt her infant.
The adoption market is thus a "free market" on which the price is
set, by law, at zero. The observation that price control leads to
shortages when the controlled price is below the market price and
surpluses when it is above is neither surprising nor a failure of the
free market.

There are at least three ways in which shortages
produced by price control can be dealt with. The simplest is queuing.
When the United States experimented with gasoline price control under
Nixon, one result was long lines at gas stations. Waiting in lines is
a cost, so when the lines get long enough the sum of the money cost
of gasoline plus the time cost becomes large enough to drive quantity
demanded down to quantity supplied. In the adoption market at
present, prospective parents must often wait years to adopt an
infant.

A second way of dealing with the problem is
rationing; some authority decides which prospective buyers are given
how much of the limited supply. In the case of the adoption market,
the rationing is done by adoption agencies that are authorized to
arrange legal adoptions. They impose their own criteria in order to
eliminate enough prospective parents so that they can provide
adoptions for the remainder. Some of the criteria they use may be
defensible as attempts to select the applicants best suited to be
parents. Others, such as the requirement that the adoptive parents be
of the same religion as the infant's natural mother, seem to make
sense mainly as a way of reducing the number of
applicants.

The third possibility under price control is a
black market. It is legal for adoptive parents to make payments to
lawyers to arrange adoptions and to the infant's biological mother to
cover her medical costs. Currently, the cost of arranging a private
adoption of a healthy white infant is in the tens of thousands of
dollars, which is quite a lot more than the pecuniary costs usually
associated with childbirth. Presumably some of that ends up as an
illegal payment to the mother for her consent, disguised as something
else, and some goes to the lawyers who arrange the
transaction.

On this market as on others, the problem could be
eliminated by eliminating price control, permitting adoptive parents
to negotiate mutually acceptable terms with the natural mother. That
solution has been proposed by, among others, Judge Posner. It is
widely believed among his fellow legal academics that that fact alone
makes it almost certain he will never be on the Supreme Court,
despite being one of the most distinguished jurists and legal
scholars of his generation. What senator would vote for the
confirmation of a candidate who had openly advocated selling
babies?

Why does the proposal produce such a strong
negative reaction? The obvious answer is that it involves selling
human beings, and human beings should not be owned. But what an
adoptive parent gets is not ownership of a baby but parental rights
(and obligations) with regard to a baby. If "owning" a child in that
sense is objectionable, why is it not equally objectionable when the
owner is a natural or adoptive parent under current law?

A better argument against a free market in
adoptions is that, while it will maximize the joint benefit to the
parties to the transaction—adoptive parents and natural
mother—it may ignore costs and benefits to the child. But it
is hard to see why that should be more true than under current
institutions; in neither case do the infants get a vote. People
willing to pay money to adopt a child are typically people who very
much want to be parents—which is, after all, one of the chief
qualifications for the job. Why is the willingness to wait three
years and fill out lots of forms, or the ability to find and
willingness to pay a lawyer with the right connections, better
evidence? Adoption agencies claim to impose their restrictions with
the welfare of the child as their chief objective—but why
should we expect them to be more concerned with the welfare of a
particular infant than either its natural mother or the couple that
wants to adopt it? Infants have considerable influence over their
parents, natural or adoptive, and very little over the running of
adoption agencies.

A more interesting argument, and one with a much
broader range of applications, goes under the name of
"commodification." The idea is that a transaction between two parties
affects others, not in the direct ways economists normally include in
their analysis of externalities but in a more subtle
fashion—by changing how people think. If we permit payments of
money in exchange for babies—even for parental rights with
regard to babies—we will start thinking of babies as things
like automobiles and jewelry, commodities not people. If we permit
cash payments between a prostitute and her customer, we will start
thinking of sex as a service that women sell rather than part of a
loving relationship. Thus, argued Margaret Radin in a widely cited
law review article, even if prohibiting prostitution makes both
prostitutes and their customers worse off, it might still be proper
to prohibit it on the grounds that permitting it commodifies sex and
so makes men and women in general worse off. On similar grounds, it
might be proper to prohibit a free market in adoptions.

[article link]

I find the argument ingenious but unconvincing.
Even where prostitution is common, very few
people—prostitutes, customers, or others—regard it as a
model for what sex is supposed to be. Men sleep with prostitutes not
because they would not prefer to sleep with women who love them but
because there are no suitable women who love them and are willing to
sleep with them.

Also implicit in the argument is the assumption
that what matters is what the law says rather than what people do.
Prostitution, as Radin recognizes, exists at present throughout the
United States, even though it is legal only in two rural counties in
Nevada. Adoptive parents pay money at present to get an infant,
probably more than they would pay if direct payments were legal,
since the real cost of price controlled goods, including waiting
time, covert payments, and the like, is usually higher than the cost
of the same goods on legal markets without price control.

To argue that legalizing such transactions will
also make people see them as legitimate requires two assumptions,
both implausible. The first is that if anything is not illegal it
must be good, which suggests a view of society along the general
lines of T.H. White's ant nest, where everything was either forbidden
or compulsory. In a nation where private gambling is illegal but many
states conduct lotteries, it is hard to believe that many of us make
a close identification between good/bad and legal/illegal.

The second necessary assumption is that people
view government as a source of moral authority. Current polling
results put government fairly far down on the scale of public
approval. As William Godwin put it almost two hundred years ago, in
his response to the argument that we need government run schooling in
order to teach people morality, one should hope "that mankind will
never have to learn so important a lesson through so corrupt a
channel."

Commodification is an ingenious argument, but less
novel than it appears. It is simply a new version of the traditional
social conservative argument against both immoral behavior and free
speech: that ideas matter, that preaching, or demonstrating, bad
principles leads to bad behavior.

Seen from this standpoint, Radin's argument for
why laws against prostitutionmight be
justified fits oddly with the jurisprudence of the First Amendment.
Courts routinely hold that acts which might properly be banned as
acts, such as burning the American flag, are also speech, and because
they are speech are legally protected. The commodification argument
holds that some acts that ought not to be banned as acts, such as the
transaction between a prostitute and her client, are also speech, and
because they are bad speech ought to be banned. There is nothing
logically indefensible in the claim, but once it has been accepted it
becomes hard to see why one should not accept broader arguments in
favor of government censorship of bad ideas.

I have devoted so much time to this set of
arguments not only because they are interesting but also because they
relate to an important set of legal issues raised by new reproductive
technology. One such technology, in vitro fertilization, has now
become both common and widely accepted. A second and technologically
simpler, the use of surrogate mothers, is still controversial, with
courts generally reluctant to enforce a contract by which a woman
agrees to be artificially inseminated with sperm from a man whose
wife is infertile and to turn over the resulting infant to the couple
for adoption. A third, producing an infant by cloning a cell from an
adult human, has not, so far as we know, happened yet, but is almost
certainly now possible. Coming up in the near future is the
possibility of giving parents some control over which of the children
they could produce they do produce, and perhaps, in the somewhat
further future, giving their children characteristics that no child
naturally produced by those parents would have. Other technologies,
some of which have already been implemented in mice and could be in
humans, could permit a lesbian couple to produce a child genetically
related to both of them.

All of these practices have been or will be
criticized in ways similar to current criticisms of legalizing the
adoption market. Arguments will include claims that even though the
transactions are voluntary, some participants are being taken
advantage of. They will include arguments based on the presumed
interest of children, with the implicit assumption that parents who
employ new technologies will be less committed to their children than
parents who produced them the old fashioned way. They will get much
of their force from a deep-seated belief that these things are
contrary to nature, that they treat human life in ways it ought not
to be treated. New things are frightening.

"What this new technique, and so many
others like it, tell us is that there is nothing special about human
reproduction, nor any other aspect of human biology, save one. The
specialness of humanity is found only between our ears; if you go
looking for it anywhere else, you'll be disappointed."

Mouse geneticist Lee Silver, responding
to a bioethicist concerned that a technique that might make it possible
to produce human sperm by implanting human cells in the testes of an
animal challenged "the specialness of humanity."

While arguments against the transactions
associated with new reproductive technologies will probably prevail
in many courts, that may have very little effect on how widely such
technologies are used. Consider the case of host mother contracts.
Such contracts are criminal in at least one state and to varying
degrees unenforceable in most. But that has very little effect on
what actually happens, because people who want to make such contracts
can choose where to do so—and, of course, choose states with
favorable legal rules. Even where the contract is not entirely
enforceable, that fact has become relatively unimportant as firms in
the business of arranging host mother transactions have learned to
identify and avoid potential host mothers who are likely to try to
renege on their agreement after the fact.

Rationing
Surplus Kittens: A Feline Digression

Some time back, my children decided that they
wanted kittens, so we took a trip to the local Humane Society. It was
an interesting experience. We ended up spending several hours waiting
in line to receive one of a small number of permissions to "adopt" a
pet, filling out forms, and then being interviewed by a Humane
Society employee to make sure we were suitable adopters.

What was puzzling about the experience is that
kittens are a good in excess supply. The Humane Society has more of
them (and of cats, puppies, and dogs) than it can find homes for and,
although it does not like to say so, routinely kills surplus animals.
Rationing goods in excess supply is not usually a problem. Yet the
Humane Society was deliberately making it costly, in time and effort,
to adopt a kitten, and trying to select which lucky people got to do
so, despite their knowledge that the alternative to being adopted was
not another adoption but death. Why?

Part of the answer was that they gave out only
seven adoption permits at each two hour interval because that was as
many as they could process, given a limited staff and the requirement
that each adopter be suitably checked and instructed. But that raises
a second question. Since they did not have enough staff to process
everyone who came, why insist on extensive interviews? Better owners
are no doubt superior, from the standpoint of a cat, to worse owners,
but almost any owner is better than being killed, which was the
alternative.

So far as I could tell, the only real function of
the process was to make the employees feel important and powerful,
handing out instructions and boons to humble petitioners. That
suspicion was reinforced when the woman interviewing us insisted very
strongly that cats should never be permitted outdoors, stopping just
short of implying that if we would not promise to keep our new pets
indoors she would not let us have them. On further questioning, it
turned out that she did not apply that policy to her own
cat.

We left the Center petless, obtained two kittens
from a friend (and very fine cats they have become), and I wrote an
unhappy letter to the local newspaper with a copy to the Humane
Society. The result was a long phone conversation with one of the
women running the shelter. She explained that there were two models
for such shelters: one in which animals were given out on a more or
less no questions asked basis and one involving the sort of "adoption
procedures" I had observed. When pressed on the fact that the real
effect of her shelter's policy was to discourage adoptions and thus
kill animals that might otherwise have lived, she responded that if
they followed the alternative policy nobody would be willing to work
for the shelter, since employees would feel they were treating the
animals irresponsibly. That struck me as a kinder version of the
explanation I had already come up with.

When the decision of what baby goes to what parent
is made by an adoption agency, there is no good reason to expect the
people making it to prefer the baby's welfare to their own. When the
equivalent decisions are made for pets, there is no good reason to
expect the people making them to put the animal's welfare—or
life—above their own feelings.

Are Babies A
Good Thing?

In recent decades, it has been widely argued that
babies are a bad thing, that when I decide to have one more child the
predictable result is that other people are worse off and the world a
less pleasant place. This belief, which has led to a variety of
proposals for laws and policies designed to reduce the birthrate, is
based in part on bad economics and in part on possible, but
contestable, empirical claims.

The argument starts with the idea that more people
mean less resources for each—less land, water, minerals,
petroleum, and the like. The statement may be true, but the
conclusion that by having a child I make yours worse off does not
follow. Children are not born clutching deeds to a per capita share
of the world's land and oil. In order for my child to acquire land,
he must buy it, which means that he must produce, or I must provide
him, enough valuable resources to compensate the previous owner for
giving up his land. The same is true for any other owned
resource.

By buying land, my child may (very slightly) bid
up its price. But while that is a bad thing for those who are buying,
it is a good thing for those who are selling. The externality, as I
pointed out back in chapter 3, is only pecuniary.

A better argument looks to real externalities
associated with childbearing. My child may use the public schools. He
may pollute. He may become a criminal. He may go on welfare. In these
and other ways, he may impose net costs on other people.

The list of externalities is too selective. My
child may find the cure for cancer, and so save your child from an
agonizing death. He will pay taxes, some of which will go to help pay
fixed expenses such as the national debt or veterans' pensions which
your child would otherwise have to pay. More people means a bigger
market, more competition, more customers to share in the fixed costs
of designing goods or writing books. An additional child generates
positive as well as negative externalities. In order to argue for
policies designed to reduce the birth rate, one must show not merely
that there are some negative effects but that the net effect is
negative.

As it happens, my first piece of economic
researchdealt with just this question. In it
I attempted to estimate the size of the relevant externalities in
order to calculate whether the net effect was positive or negative,
whether someone having one more child makes the rest of us, on
average, better or worse off. I concluded that the numbers were too
uncertain to permit me to calculate with any confidence the sign of
the result.

[article link]

The point is not limited to this particular issue.
Any time you are involved in a political controversy and somebody
argues for taxing or banning something because it produces negative
externalities, or for subsidizing something because it produces
positive externalities, it is worth trying to draw up your own list
of externalities—of both signs. It is only too easy to
generate an apparently objective argument for either conclusion by
suitable selection.

Two Routes to
Efficiency

Perceptive readers may have noticed that in this
chapter I have invoked two different sorts of arguments for the
efficiency of law and custom. One derives efficiency from standard
economic arguments, expansions of the simple case for Laissez-Faire
presented in chapter 2. The use of engagement rings as bonds, for
example, is a rational response by individuals to the problem of
making possible sex before marriage while controlling the risk of
opportunistic breach by the male partner. The increased instability
of marriage over the past century would have happened in a world
where marriage contracts were explicitly negotiated as couples
rationally adapted the terms of their agreement in response to a
decrease in the sunk costs associated with it. The same
individualistic approach can sometimes also be used to derive from
rational behavior the existence of inefficient outcomes, such as
opportunistic breach due to women performing early in marriage and
men late.

The same cannot be said of arguments that
interpret laws against adultery or prostitution, or legal rules
designed to protect children, as efficient adjustments to the
corresponding problems. It cannot even be said of changes in marriage
law as they actually happened, since in our society terms of marriage
are not individually negotiated; contractual agreements on terms such
as easy divorce would almost certainly be held unenforceable as
contrary to public policy. Such arguments require some more general
mechanism to push legal rules toward efficiency. It is not obvious,
pace Posner, that such a mechanism exists. It is particularly
puzzling if we wish to explain legal rules designed to protect
children. Children, after all, neither vote, lobby nor litigate,
which ought to eliminate their welfare from influencing the
mechanisms that most obviously determine law.

Altruistic parents care about the welfare of their
own children—but not, or not very much, about the welfare of
other people's children. If I care about the welfare of my children I
have no need to lobby for laws against abuse, or to make divorce more
difficult; I know I am not going to abuse my children and that I will
take due account of their welfare when deciding whether to get a
divorce.

The distinction between arguments for efficiency
based directly on individual rationality and those that require some
more elaborate mechanism runs through the analysis of the law. The
efficiency of the terms of a negotiated contract follows directly
from the rationality of the parties. The efficiency of the law of
contracts—supposing that it is efficient—is harder to
explain. We will return to that topic in chapter 19.

Further Reading

The anecdote of the poor woman and the 200 dinar
is slightly condensed from The Table-Talk of a Mesopotamian
Judge, by al-Muhassin ibn Ali al-Tanukhi, D. S. Margoliouth,
tr.

Both the idea and the title of one section of this
chapter are borrowed from Lloyd Cohen, "Marriage, Divorce, and Quasi
Rents; or, 'I Gave Him The Best Years of My Life'", JLS XVI,
1987.

The classic presentation of the commodification
argument is Radin, Margaret, "Market-Inalienability", 100 Harv.
L.Rev. 1849 (1987); you may find it more convincing than I
did.

Lee Silver, Remaking Eden, provides an
entertaining and informative account of reproductive technology,
current and forthcoming.